Thames and lenders hire lawyers over debt crunch

THAMES WATER and a group of lenders to its parent company have drafted in lawyers amid a brewing fallout over the troubled supplier’s future.

Freshfields Bruckhaus Deringer and Linklaters have been instructed by Kemble lenders and Thames Water respectively, as a potential restructuring battle looms.

The magic circle duo are among a raft of City advisers working on the potential fallout from Thames Water, which is battling to stave off a special administration regime that could spark huge losses for creditors.

Sir Adrian Montague, chairman of Thames Water, began his career at Linklaters and was formerly a partner at the law firm.

Lenders to both Thames and Kemble are facing uncertainty over the supplier’s future, as it emerged that some creditors could suffer losses of up to 40pc if the company is nationalised.

Concerns over Thames Water’s finances prompted groups to enlist advisers ahead of a prospective legal battle, with EY separately advising Kemble lenders on financing negotiations.

The Telegraph reported last month that a syndicate of banks behind a £190m loan to Kemble includes the Bank of China and the Infrastructure and Commercial Bank of China. Kemble is meant to repay by the end of April, but the deadline is set to be missed after shareholders cut off funding. It will then be up to the banks to grant an extension or tip the company into administration.

Strategic discussions are also being held among other lenders in the Thames structure, which consists of an £18bn debt pile.

A debt analyst close to the situation said that by teaming up, creditors could appoint their own legal advisers.

He said: “The one group of people that are going to get paid here are the lawyers. You probably do want to band together to get some legal steer on the art of the possible.”

Freshfields, Linklaters and Thames Water declined to comment.